NEW DELHI: Mobile phone companies and the department of telecommunications want finance minister P Chidambaram to address a slew of long-pending demands, including providing the "infrastructure" status to the sector and revising the "high" taxes and levies on the industry. In its communication to Chidambaram, the DoT said it has already committed towards getting telecom classified as an infrastructure sector, a tag that will give the debt-ridden industry access to easier credit.

Industry associations have been lobbying for infrastructure tag so that they can avail I-T exemptions in addition to higher limits on external commercial borrowings, lower import duties and exemptions on excise duty on telecom infrastructure equipment.

The infrastructure status will also allow companies to get loans at interest rates of 3-4 per cent as against the market rate of 12-13 per cent. This may be critical for an industry that is fighting falling margins, primarily due to an estimated debt of over Rs 200,000 crore accumulated to finance spectrum costs.

"For short term revival and medium term growth to take India's economy from $1 trillion to the next trillion, sectors such as telecom will play a significant role," said Himanshu Kapania, managing director of Idea Cellular.

"The telecom sector needs large scale investments both to take mobility to rural areas as well for broadband rollouts on the 3G and 4G platforms. But the industry is confronted with high levels of debt and very low returns on equity and capital employed. So, the sector needs support in the upcoming budget, including infrastructure status so that investments can comeback to the telecom sector."

Mobile operators are set to face several challenges this fiscal, including major cash outgo as several regulatory changes will force the sector to shell out billions of rupees in spectrum costs.

"The telecom sector essentially providing public telecommunication services should be viewed as a critical infrastructure industry in order to maximize the GDP growth of the country," said Rajan S Mathews, director-general of the Cellular Operators Association of India.

DoT officials are confident of Chidambaram endorsing their stance on classifying telecom under infrastructure, and point out that finance ministry had taken steps in the past to help telcos get easier credit.

The COAI also pointed out that despite long-term viability of the sector, the regulatory uncertainty had led to banks and foreign investors not wanting to take fresh exposure.

"It is critical that the industry is provided a dedicated sectoral allocation/fund to ensure consistent financial support for long terms of 15-18 year tenures," it said a letter to Chidambaram. "Also, there is a need to infuse funds by way of redeemable preference shares (RPS), spectrum mortgage, etc to bring the necessary capital investment back into the sector."

The DoT has also been aggressively lobbying for a 10-year tax holiday for telcos offering broadband services on the latest technology platforms.